ICICIdirect.com report on Infosys
"Infosys reported an in-line Q3 but the key highlight was its earning commentary - as simple and succinct as it could be. The company emphasized its single minded and “more than-ever-before” focus on reviving growth and is working on three strategic initiatives - sales effectiveness, delivery effectiveness and cost optimisation - to drive industry leading growth and margins. Overall restructuring seems to be paying off, despite c-level exits, and suggests growth could accelerate - along with margin expansion - going into FY15E. That said, reasonable valuations dictate our HOLD rating and we would be buyers in sell-offs."
"We estimate Infosys to report revenue, EPS CAGR of 18.5 percent, 15.1 percent over FY13-FY15E (with average 24.7 percent EBIT margins in FY14-15E), slower than 19.3 percent, 14.1 percent reported during FY08-13 along with average 28.7 percent margins. However, with margin concerns alleviating and growth profile nearing industry average, we believe, P/E multiples could revert to their mean. Consequently, we value the stock at 17.5x (is in-line with its five-year average) FY15E estimate of Rs 215 and maintain our HOLD rating on the stock with a target price of Rs 3750. However, we reiterate that growth and margins could accelerate going into FY15E and sharp sell-offs could be used to accumulate the stock," says ICICIdirect.com research report.
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